Board Members Paying Membership Fees: Do They Need to Be Disclosed?

Financial reporting under the Incorporated Societies Act 2022 is bringing many associations closer to the XRB reporting standards, and with that has come increased discussion around related party disclosures.

One question that is emerging across the sector is simple but surprisingly nuanced:

If a board member is also a member of the association and pays a membership subscription, does that need to be disclosed in the financial statements?

Under PBE IPSAS 20, board members are considered related parties because they hold governance responsibility and influence over the organisation. This means transactions between the organisation and board members must be considered when preparing financial statements.

For most associations, the most common related party transaction is simply the membership subscription paid by board members.

In many cases these subscriptions are paid on the same terms as every other member and the amounts involved are relatively small. In these situations, many organisations disclose the transactions in aggregate, rather than listing each individual board member separately.

A typical disclosure may look something like this.

Example: Related Party Disclosure

Note X: Related Party Disclosures

Governing Body and Key Management Personnel

The members of the Board during the year were:

• [Name], Chair
• [Name], Deputy Chair
• [Name], Board Member
• [Name], Board Member

The Board members are considered related parties in accordance with PBE IPSAS 20.

The Chief Executive is also considered key management personnel.

Membership Subscriptions

During the year, Board members paid membership subscriptions on the same terms and conditions as other members. These subscriptions were charged at standard rates and on normal commercial terms.

Total membership subscription income received from Board members during the year was $X (2025: $X).

No amounts were outstanding at balance date.

This approach provides transparency while remaining proportionate. The disclosure acknowledges that related party transactions exist without itemising every individual board member.

Reimbursements and Other Transactions

If board members receive reimbursements for travel or other governance expenses, these are often disclosed in aggregate as well.

For example:

During the year, Board members were reimbursed $X (2025: $X) for out-of-pocket expenses incurred in the performance of their governance duties. No honoraria were paid.

Where there are no significant transactions beyond ordinary membership subscriptions, some financial statements simply note:

Board members transact with the Society in the ordinary course of membership. All transactions are conducted on normal terms and conditions. No material related party transactions occurred during the year.

When Greater Disclosure Is Required

More detailed disclosure is expected where the relationship goes beyond normal membership activity. For example:

• a board member’s company supplies services to the organisation
• consultancy or professional services are provided by a board member
• loans or financial arrangements exist
• special pricing or non-arm’s-length arrangements occur

In these situations, the XRB standards expect clear and transparent disclosure.

A Practical Reality: Interpretation

One important point to recognise is that there is still a degree of professional judgement involved.

While many accountants and auditors are comfortable with aggregate disclosure for routine transactions such as membership subscriptions, some auditors take a stricter view and may expect individual board member transactions to be listed separately.

In practice, this means the approach adopted can depend on the interpretation of your accountant or auditor. The underlying principle remains transparency, but how the disclosure is presented can vary between organisations.

The Bottom Line

For most associations:

• Board members paying standard membership subscriptions is entirely normal.
• The amounts are typically small relative to overall revenue.
• Disclosure is usually made in aggregate form.

However, societies should discuss the approach with their accountant and auditor to ensure it aligns with their interpretation of the XRB standards.

As always, organisations should confirm the approach with their accountant or auditor to ensure it aligns with their interpretation of the XRB reporting standards.

What matters most is that organisations acknowledge the relationship and ensure the financial statements provide clear and transparent information to members.